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Studentka2010 [4]
3 years ago
13

Razor Inc. manufactures industrial components. One of its products used as a subcomponent in auto manufacturing is Fluoro2211. T

he selling price and cost per unit data for 9,130 units of Fluoro2211 are as follows.
Per Unit Data
Selling Price $410
Direct Materials 150
Direct Labor 28
Variable Manufacturing Overhead 25
Fixed Manufacturing Overhead 43
Variable Selling 16
Fixed Selling and Administrative 23
Total Costs 285
Operating Margin $125

During the next year, sales of Fluoro2211 are expected to be 10,130 units. All costs will remain the same except for fixed manufacturing overhead, which will increase by 20%, and direct materials, which will increase by 10%. The selling price per unit for next year will be $420. Based on these data, Razor Inc.'s total contribution margin for next year will be: __________
Business
1 answer:
Neko [114]3 years ago
3 0

Answer:

Total contribution margin= $1,884,180

Explanation:

Giving the following information:

Direct Materials 150

Direct Labor 28

Variable Manufacturing Overhead 25

Variable Selling 16

Sales in units= 10,130

Selling price= $420

Direct material cost= 150*1.1= $165

<u>First, we need to calculate the unitary contribution margin:</u>

Unitary contribution margin= selling price - total unitary variable cost

Unitary contribution margin= 420 - (28 + 25 + 16 + 165)

Unitary contribution margin= $186

<u>Now, the total contribution margin:</u>

Total contribution margin= 10,130*186

Total contribution margin= $1,884,180

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